What Are The Costs Of Buying a House In the UK?
Buying a house is one of the biggest financial investments you will ever make. The amount you agree to pay for a property, on the other hand, there are many other costs involved in buying a home.
This article describes all of the expenditures connected with purchasing a new house. The costs of buying a house are divided into two categories: upfront fees that must be paid before the purchase can be completed and charges that must be paid after the purchase has been completed.
Costs Of Buying A House:
The deposit is the first and most important costs of buying a house. If you’re a first time buyer, you’ll generally need to come up with about 5% of the buying price, e.g. £12,500 for a £250,000 house.
The more you save for a deposit, the lower your loan-to-value (LTV) ratio, which is the difference in the amount you invest and the amount you borrow from a bank. So, in the case above, if you can increase your deposit to £25,000, you’ll be paying 10% of the house price, leaving an LTV ratio of 90%. A 10% or 15% deposit provides the benefits of better mortgage products with lower interest rates, reducing the amount you have to pay until you own the house entirely.
If you’re moving, the proceeds from the sale should cover the deposit for a house on a new mortgage. If you sell your home for £250,000 and still owe £150,000 on your mortgage, you’ll have £100,000 to put toward a forwarding property and one with a lower LTV ratio – and thus a lower interest rate.
Mortgage Fees:
Many legal, regulatory, and tax charges are associated with purchasing a home. Stamp duty is one of the costs you’ll most likely face.
First time home buyers may not have to pay stamp duty on the first £3,00,000 of the property price if the value of the property is up to £5,00,000 (it may change in future and please take conveyancer advice before you decide to purchase a property).
A product arrangement charge and a booking fee are usually included in mortgage set-up expenses. Extra expenses, such as valuation fees, might be payable in some cases.
All mortgage fees should be shown in the key facts illustration when arranging a mortgage with a lender. The booking fee is a price that you might have to pay when you apply for a mortgage in some cases.
Depending on the lender and the mortgage type, the arrangement fee, can range from £500 to £2,000.
Estate Agent Fees:
The vendor, not the buyer, is responsible for these costs. They are a payment for the estate agency’s services and are usually between 1% and 3% of the sale price + VAT when the property is put up for sale. In the case of a high-end home, this can be a huge sum of money.
Also Read: 7 Essential Questions to Ask a Mortgage Adviser in First Meeting
Valuation Fee:
You pay a fee to have your potential new house assessed so the lender feels comfortable lending you the money you need. The valuation charge varies in price, and the lender may or may not perform the valuation for free.
Surveyor Fee:
A property survey is optional and it is to determine whether the property has any faults, such as structural issues, subsidence, or dampness. You can choose between two types of surveys. A homebuyer report examines the property’s overall condition and costs roughly between £450 and £1,000, depending on the property’s valuation. A building survey costs between £600 and £1,500 and examines the structure and structure of the house in further depth.
Conveyancing Fees:
Conveyancing fees, often known as lawyers’ fees, are given to a licensed conveyancer who handles the legal aspects of buying a home. Depending on the location and type of property, the conveyancer will charge a flat fee, which usually ranges from £500 to £1,500 and you also need to bear lenders conveyancer fee and other charges like search fee, fund transfer fee etc.
Also Read: Is It Worth Getting an Offset Mortgage Account?
Land Registry Fee:
The Land Registry is a government agency that keeps track of all registered properties in England and Wales and levies a fee to register a property with a new owner. The charge might range from £30 to £910, depending on the property value.
Mortgage Repayments and Associated Charges:
Mortgage payments are the most important recurring cost of owning a home for most people. The only way to avoid them is to pay cash for your property, which rarely happens unless you’re reducing considerably or have received a huge sum of money from inheritance or savings. You can lower your payments by applying for the lowest mortgage interest rates, which require a 40% deposit on the purchase price.
If the home is worth £300,000 and you have a £180,000 mortgage, you already own £120,000, or 40% of the property. Lenders will provide you with the greatest interest rates available if your LTV is 60 percent.
Go to a professional financial advisor like Mountview Financial Solutions for deep mortgage repayments knowledge.
Also Read: Rent Vs Buy Home : How to Make the Right Decision
Wrap up:
Last but not least, consider whether you’re buying a leasehold property, especially if it’s a flat in a city. Extra recurring costs, such as ground rent, service charges, and maintenance charges for building repairs, are typically shared among all building owners. Also, hire a professional mortgage advisor in London for a better solution, and Mountview Financial Solutions is the best option for your needs.
